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The key to a successful transition into retirement lies with several tactics, and preparation — both financial and non-financial — is among the most significant, according to one expert.
“The highest single correlation to that success is how much time you spend preparing prior to retirement — not only on the financial elements, which is obvious, and everybody does it, but not as obvious is the non-financial side,” said Fritz Gilbert, author of “The Keys to a Successful Retirement” and guest on a recent episode of Yahoo Finance’s Decoding Retirement.
According to Gilbert, who also publishes the Retirement Manifesto blog, the more time spent planning for both sides of retirement, the higher the chances that “you’ll find those things in retirement that will bring you the sense of fulfillment that you’re hoping to have in retirement.”
Many prospective retirees don’t start thinking about their post-retirement plans until after they’ve left the workforce. Gilbert, however, took a different approach, beginning his planning years in advance — a move he credits as instrumental to his success.
“It certainly helps,” he said. “It’s been demonstrated that the more you do in advance in terms of this planning, the smoother that transition will be.”
In order for retirees to ensure they have enough money to maintain their desired lifestyle, Gilbert recommended tracking spending before even entering retirement.
“You can’t go into retirement without having a good baseline of spending,” he said. “It’s a math problem, ultimately. And the more variables that you can eliminate, the better your plan will be.”
Read more: Retirement planning: A step-by-step guide
According to Boston College’s National Retirement Risk Index, 39% of working-age households will not be able to maintain their standard of living in retirement.
In Gilbert’s case, he and his wife tracked every expense for 11 months to establish a baseline and then adjusted for retirement by accounting for downsizing, travel, and other changes. He also used tools like the 4% rule (spending 4% of your portfolio annually) as a guide.
“See how it compares to that estimated spending number,” he said, noting that if it’s close, you should be fine. But if it’s not close, you’ll need to consider working longer or cutting expenses.
Gilbert also recommended his “90/10 rule.” Before retirement, the self-described spreadsheet nerd said he spent 90% of his time thinking about money and just 10% of his time focused on the non-financial side of retirement.
“I was a real money nerd,” he said. “I was really focused on the numbers.”
However, once he determined that his finances were secure and he retired, the time he spent focusing on money completely flipped.
“As that transition happens, you find yourself thinking less about the money because you’ve kind of worked through the kinks, and you know what you have to spend,” he said. “And you start thinking about, what am I going to do with my life? What’s going to get me that fulfillment and that excitement every day? And it’s not the money. Money is a means to an end. But as you get into retirement, you start looking for the end and not just the means.”
And that shift came as a surprise to Gilbert. “It’s a mental shift that I was not expecting,” he said. “It was one of my bigger surprises. It’s a pretty common reality that you do worry about (money) a lot less after you settle in.”
Gilbert explained how work often provides people with the “big five”: identity, structure, purpose, a sense of accomplishment, and relationships.
Retirees have to find a way to replace those. How might they go about doing that? First and foremost, it’s vital to recognize the importance of replacing the big five since they disappear once a retiree leaves work.
Many struggle early in retirement to find structure, purpose, or relationships, Gilbert said. “That’s when you’re starting to recognize that [you’ve] lost these things. Suddenly you have no structure in your life.”
In his case, Gilbert began replacing the “big five” by starting his blog three years before retiring. “I was looking for things that could potentially develop into things that give me fulfillment in retirement,” he said. “So I pursued it … and what does that give me now?”
In short, it’s given him a sense of identity, purpose, and structure.
That’s why he encourages both prospective and current retirees to replace the “big five” by actively exploring their curiosities.
“Pursuing your curiosity is not a skillset that we’ve exercised for a long time,” Gilbert said. “So it’s rebuilding that muscle and learning to explore and just have fun with it and recognize you’re going to try a lot of things that aren’t going to work … it’s a serendipitous process. It’s not a spreadsheet. But if you get better with it in time.”
Retirement isn’t just an individual decision — it also affects the entire household.
Gilbert emphasized the importance of discussing expectations before retirement. In his own experience, he and his wife conducted a “test retirement,” spending 10 days together to talk about their goals, the balance between “me time” and “we time,” and their travel preferences.
It also helped to do regular check-ins post-retirement to address changing needs and expectations, he said.
Linda Ryall and Todd Nielsen look at each other’s phones at a charging station located in the Issaquah Senior Center in Issaquah, Wash., Friday, Nov. 22, 2024. (AP Photo/Manuel Valdes) ·ASSOCIATED PRESS
Despite all his planning and preparation, retirement did come with several unexpected surprises and challenges for Gilbert.
Transitioning from a saving mindset to a spending one was harder than anticipated.
“It’s tough to shift from building your nest egg to using it, knowing it has to last a lifetime,” he said. And that’s especially the case for retirees who are worried about running out of money. “It’s a very common tendency to continue to be conservative [and] underspend.”
In 2024, 67% of retiree respondents in a Goldman Sachs survey indicated they had too many monthly expenses, while 55% reported credit card debt.
Gilbert suggested using the bucket approach to creating a retirement income plan as one way to address the fear of running out of money. The bucket approach involves dividing your assets into separate “buckets,” each designated for a specific time horizon or purpose.
Typically, it includes a short-term bucket, which holds cash or low-risk investments to cover immediate expenses (e.g., 1–3 years); a mid-term bucket, which contains moderately conservative investments for expenses in the next 3–10 years; and a long-term bucket, which includes growth-oriented investments, like stocks, intended for use 10-plus years into retirement.
In terms of mindset, Gilbert’s retirement turned out just as he imagined: He pursued his curiosity and explored new interests as he planned.
However, where that mindset has taken him has been completely unexpected. For instance, he never thought he’d have a woodworking shop or a dedicated writing studio, but those came about through unexpected opportunities, like charity work.
“The biggest surprises — and the greatest excitement — have come from following where my curiosity has led me,” Gilbert said.
He also discovered that he could find fulfillment in retirement by focusing on others. Retirement, he said, is an excellent time to give back, whether through mentoring, volunteering, or charitable work.
“Start looking at people that maybe haven’t made it yet,” he said. “And find a way to use your time to benefit those in need.”
Each Tuesday, retirement expert and financial educator Robert Powell gives you the tools to plan for your future on Decoding Retirement. You can find more episodes on our video hub or watch on your preferred streaming service.
